Things You Need to Know About Life Insurance
Having a life insurance policy is not that easy because you need to consider different aspects first. The most common of them is the fact that you are doubtful on the importance and significance of having a life insurance. But for individuals who think about their financial future in case of death of any family member, they consider getting a life insurance.
Life insurances also offer built-in cash value, reaping dividends and tax-free investment aside from the fact that it gives protection to you. Purchasing it with discretion can lead a policyholder to utilize it as liquid cash which he can use whenever he needs it.
Depending on the type of need, there are various types of policies that is customized to fit each these needs. It is also a wise decision if you consult a financial expert to help you pinpoint the right policy for you by also considering the number of dependents you have right now.
There are two basic forms of life insurances: the whole life insurance and the term life insurance. Other terms for a term life insurance policy are temporary or short-term life insurances. This can only serve and give benefits to those individuals whose death belong to the period of the validity of the policy they got. But in case the person lives past the time specified on the term, he will not get anything at all.
Short-term policies are cheaper than a whole life insurance that’s why young individuals who have dependents prefer to get it as well as those who have car or home loans. During the initial years, the premium you pay is low but as the insured’s mortality risk increases as he age, the premium cost also increases making the premium almost equal to that of a whole life insurance.
There are two kinds of term insurance and these are the renewable term that has increasing premium and the level term that has a decreasing premium. The premium for a level term is high for the first years compared to that of a renewable term but it decreases in the later years.
But if you are looking for life protection and ingrained cash value features, you should get a whole life insurance. The actual cost of the insurance may be overlapped by the initial steep premium of this whole life insurance. You can use the surplus or the cash value to add in your separate account that you can use to give a level premium on the later part or use it for a tax-free investment. You are also guaranteed that you get the death benefit on the maturity or upon death of the insured aside from the cash value you have.
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